Central Virginia Electric Cooperative v. State Corp. Commission

273 S.E.2d 805, 221 Va. 807, 1981 Va. LEXIS 212
CourtSupreme Court of Virginia
DecidedJanuary 16, 1981
DocketRecord No. 800165
StatusPublished

This text of 273 S.E.2d 805 (Central Virginia Electric Cooperative v. State Corp. Commission) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Central Virginia Electric Cooperative v. State Corp. Commission, 273 S.E.2d 805, 221 Va. 807, 1981 Va. LEXIS 212 (Va. 1981).

Opinion

COMPTON, J.,

delivered the opinion of the Court.

In this appeal of right, Central Virginia Electric Cooperative (CVEC) attacks a decision of the State Corporation Commission which revoked and modified the cooperative’s line extension policy.

[810]*810CVEC is a public utility under the Electric Cooperatives Act, Code §§ 56-209 to -231. As of January 1, 1978, the cooperative furnished electric service to approximately 15,000 Virginia customers in parts of 14 counties. The western boundary of CVEC’s territory adjoins the Blue Ridge Parkway.

Pursuant to statute, the cooperative had filed tariff schedules with the Commission. They included a section entitled “Rural Extension Policy and Charges.” That section prescribed the conditions for extending electric power distribution facilities to new residential customers of CVEC. The basic issue before the Commission was the reasonableness of the cooperative’s line extension charge.

This proceeding commenced in October 1978 when the Commission issued a Rule against CVEC as defendant requiring it to appear before the Commission and show cause “why the Commission should not find its present Line Extension Policy unreasonable and why it should not be required by further order of the Commission to change its present Line Extension Policy to give new customers more reasonable access to the facilities of the defendant.” Attached and made a part of the Rule was a November 1977 report of the Commission’s Staff setting forth the nature of the complaint giving rise to issuance of the Rule.

A portion of the report provided:

Whereas the fundamental aim of most Cooperatives is to extend facilities at no charge to the. customer or at least spread the cost of extension over a five year period through the imposition of a minimum, monthly charge, CVEC requires the applicant to provide up-front payment to cover the excess cost. Based upon the consumer inquiries received by the Staff, these up-front payment amounts are substantial ($1,000 to over $20,000) and in many instances prohibitive for the customer. As a result, citizens have purchased land and are unable to construct a home due to the extremely high cost of extending electric service and, in a number of instances, citizens have homes under construction or completed but are unable to reside in them because they don’t have enough money to pay for an electric service extension.

Included as a part of the Staff Report was a 1975 Staff Memorandum which reviewed the line extension policies of the 15 cooperatives certificated to operate in Virginia. The Memprandum summarized the charges to an applicant for “single phase, overhead service to dwellings occupied as a residence on a year round basis.” The [811]*811Report concluded that “CVEC had the most restrictive (severe) line extension policy as relates to the costs incurred by the applicant.” The Report set forth the Staff’s opinion that CVEC’s policy was unreasonable and should be modified.

CVEC’s policy then in effect provided that it would incur the cost for extension of service up to an amount equal to one and one-half times the cooperative’s average annual investment per customer or 84 times the anticipated monthly revenue, whichever was lesser. Beyond those limits CVEC charged the applicant 80 percent of the excess cost.

During hearings held in December of 1978 and March of 1979, Commission counsel, on behalf of the Staff, presented testimony of 11 members of the public and one Staff witness. The public witnesses had dealt with CVEC in the counties of Goochland, Fluvanna, Albemarle and Nelson. Testifying for CVEC were its Manager, its Chief Engineer and a financial, economic and rate analyst.

The technical evidence to support the Staff’s conclusion that CVEC’s line extension charges were unreasonable came from Jam.es R. Wit-tine, Director of the Commission’s Division of Energy Regulation. Wittine noted that two consumer complaint surveys conducted during the period 1973-1977 showed an increase in the rate of complaints against the cooperative per 100,000 customers since 1973. At the end of 1977, CVEC had the greatest complaint rate of the 15 Virginia electric cooperatives with about 40 percent of the grievances directed to its line extension policy.

Wittine stated that the Staff had made three recent surveys of line extension charges of the 15 cooperatives; CVEC’s requirements were the most restrictive of the group. For example, he testified many would provide service at no charge while some would pay for the first 1000 feet of line with the cost for the excess being billed directly to the customer or through a minimum monthly guarantee. Wittine stated the recent trend among the cooperatives “has been towards a relaxation of the line extension policies” but that CVEC’s continues to be “the most severe.”

Wittine reviewed the current and long-standing policy of the Rural Electrification Administration (REA) for extension of electric service to rural users. That policy provides that extension be made “without payment by such persons of any contribution in aid of construction.”

In order to illustrate the specific amount of advance payment, or “up-front charges,” which new service applicants might face from the respective cooperatives, Wittine presented a hypothetical case based on furnishing residential electric service requiring a 3000-foot ex[812]*812tension of line, one-half being over private property. In the example, CVEC’s charges to the customer for the construction exceeded all other Virginia cooperatives except one. Wittine conceded, however, the results of the hypothetical could be changed by altering one of the many assumptions, thereby improving CVEC’s ranking.

The public witnesses all expressed dissatisfaction with CVEC’s line extension policy. Illustrative of this body of complaints was the testimony of Royce A. Burruss, who bought an unimproved residential lot in 1973 or 1974 in a subdivision in Goochland County. Burruss said he had intended to build a house on the property during 1976. At that time, CVEC’s representative verbally stated the cost “to have power lines put to [the] property” would have been from $5500 to $7500. Burruss testified the anticipated cost of electric service prohibited him from going ahead with his plans. At the time of the hearing, he had not begun construction on the lot, saying, “I am just having to sit on it.”

CVEC’s Chief Engineer reviewed the cooperative’s position on the specific complaints made by the public witnesses. He described the manner in which new service applications were processed and explained why the cooperative’s estimate of charges was high.

The cooperative’s Manager related the many factors that affect establishment of a line extension policy and the cost associated with it. He noted CVEC has a customer density of five and one-half consumers to the mile and, in many locations within its certificated territory, as much as four miles of line must be built to serve the customer. He said that prudent business judgment dictated there must be “some limitation” on the amount of the cooperative’s investment for serving applicants. He noted that an “extension policy needs to be tailored to suit the individual character of the service territory,” a reference to the fact that much of CVEC’s territory is “up against the Blue Ridge Mountains.”

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Bluebook (online)
273 S.E.2d 805, 221 Va. 807, 1981 Va. LEXIS 212, Counsel Stack Legal Research, https://law.counselstack.com/opinion/central-virginia-electric-cooperative-v-state-corp-commission-va-1981.